G/L Postings for time and expense records without activeted automatic revnue recogntion

[petermeid]

Hi all,

in addition to the question of my colleague (see attached link) I have some further questions:

https://answers.sap.com/questions/670550/not-invoiced-times-and-expenses.html?childToView=671975&ans...

What happens in detail if automatic revenue recognition is NOT activated?

- Cost are posted and realized when times or expenses are recorded => impact on P&L in the period of recording

- Revenues are posted and realized when customer invoice is issued => impact on P&L in the period of issuing

- The Cost Assignment Postings do NOT post effective cost. As far as I know the JE created by that Cost Assignment Postings (Journal Enttry Type 555) debits and credits the same G/L Account (Internal Service, Expense Account, etc.). Hence it does not have any impact on legal accounting, but only on management accounting (debitting the sales order, crediting the project task).

Is all this correct?

Further question: Klaus referrs to fixed price projects. And let's assume the sales order / project is completely invoiced.

What often happens is, that during following periods (May, June, etc.) additional times and expenses are recorded although everything is already invoiced (e.g. in April). Those show up in the "Not invoiced Times and Expenses". And often they even show up in the Uposted Source Documents, e.g. as the period (e.g. April) has already been closed, etc.. Therefore 2 further questions:

- If we post those Unposted Source Documents into a later period (e.g. May, June, ..), do they impact the P&L of that period?

- What is the quickest way to get rid of the "Not Invoiced Times and Expenses". As Klaus already asked: Is it sufficient to just close the project and changing the sales order status to "finish invoicing"? Are there any JEs triggered by doing this?

Thanks for checking!

Peter

[caroline_lost · Accepted solution]

Dear Peter and Klaus,

When Revenue recognition is not activated at all in your solution then, as you say,
- Costs are posted and realized when times or expenses are recorded => impact on P&L in the period of recording.

- Revenues are posted and realized when customer invoice is issued => impact on P&L in the period of issuing.

- The Cost Assignment Postings do NOT post effective cost.
With the CPEL posting the expense is connected with the project tasks and respective sales order item.
The impact would only lay on Management Accounting, yes.

If Revenue Recognition was scoped the costs would be posted to the deferred Cost of goods sold account (Balance sheet) and cleared from here and realized on the expense account with the RevRec run (if an accrual method is assigned) or immediately, if no Accrual method is used).

In regards to expenses created after the sales order has been fully invoiced:

You can write off expenses for the project in the Edit Times and Expenses screen in Project Management. This would reverse the CPEL posting, i.e. the connection of the project expense with the sales document item.
However, the expenses remain on the expense account as long as they are not reversed.
But this way they would not be available for invoicing anymore.

Even when expenses are written off and a project is not closed they will still appear as not invoiced expenses because customer projects are billable by default. Even once the project is closed they will be visible in the OWL Project Management - Not Invoiced Time and Expenses. But they are not accessible anymore.

Regarding the finish invoicing option of the sales order item: When a sales order item is finished for invoicing then it will not be available anymore for expense assignment. This does not have any effect on the expense items. There are no postings triggered either..

So, in sum, you can never really fully get rid of the not invoiced items but you can make them unaccessible.

Regarding the unposted expenses: Yes, the expenses will be realized in the P&L in the period in which you post them. There is no effect on the P&L in the period, in which they were recorded originally.

Does this answer your questions?

Thanks and kind regards,

Caroline

[petermeid · Accepted solution]

Dear Carline,

thanks a lot for this answer! This is all I needed to know.

Peter